First Solar first to US$1 per watt manufacturing cost

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Photon Consulting may have recently projected the PV industry to reach the US$1 per watt manufacturing cost threshold in 2012, but First Solar has ignored such projections and reached this important milestone in the 4Q08, with a cost per watt of US$0.98. First Solar, not wanting to sit back and wait for competitors to catch-up, expects further reductions in the coming years that could see a cost per watt below US$0.65 by 2012 or earlier.

“We’re capable of further significant cost reductions based on the yet untapped potential of our technology and manufacturing processes,” noted Mike Ahearn, First Solar Chief Executive Officer, in a conference call with financial analysts. “In fact, the long term financial models we have previously discussed suggest manufacturing cost targets of US$0.65 to US$0.70 a watt by 2012. We picked those as interim milestones…but we believe reductions below these levels are clearly possible beyond that timeframe.”

The progressive fall in manufacturing costs of its CdTe thin-film modules was attributed to the company’s continuous focus on cost reductions as production scaled to significant megawatt levels in only a few years.

First Solar’s annual nominal production capacity will double in 2009 to a planned 1.1GW as manufacturing plants, specifically in Malaysia ramp to full production. Plants 3&4 in Malaysia are now ramping, with capital spending expected to be between US$270 and US$300 million, which is targeted at plants 3 and 4, and expansion at its existing plant in Perrysburg, Ohio. Each of the Malaysian plants or lines has a nominal capacity of approximately 190MW.

With over 1GW capacity, First Solar can leverage the cost of materials and productivity improvements to a much greater extent than in previous years, giving it the confidence that the cost per watt goals internally set could well be exceeded.

“I’d say that our ongoing improvement plans are really to continue to drive the efficiency that helps drive the costs down, drive the run rates of the factories, and then of course continuing to focus on the raw material costs as we purchase them,” commented Bruce Sohn, President of First Solar, in response to an analysts question in the conference call. “Continuing to scale facilities like our Malaysia operation helps significantly as we build out the line. And continuing to see the market develop certainly aids in our ability to drive down those costs, so we continue to stay focused on it. We think it’s a reasonable challenge for us to get there in this 2010 to 2012 timeframe,” noted Sohn.

However, First Solar didn’t just reach a company and industry milestone with the cost per watt but also achieved its highest stable conversion efficiencies in the 4Q08. According to the company, efficiency levels reach 10.8% in the quarter, further testament to First Solar’s continuous productivity improvement programmes during a period of rapid capacity expansion.

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